* House bill treats undervalued currencies as subsidies
* Vote is first by House after many threats over the yuan
* Senate action on China currency bill uncertain
* Swift action by Beijing on yuan unlikely - analysts
(Adds quotes, paragraphs 4-6)
By Chris Buckley
BEIJING, Sept 30 China on Thursday warned that
a U.S. House of Represenatives bill to penalise it for not
letting the yuan rise faster could seriously affect bilateral
In a relatively measured response, Foreign Ministry
spokeswoman Jiang Yu said Congress should avoid steps that
could harm relations, saying Beijing was "resolutely opposed"
to the bill. But she declined to say whether China would
The U.S. House of Representatives bill, which many analysts
say is unlikely to become law, is aimed at pressuring Beijing
to let its currency, also called the renminbi, rise faster by
branding it in violation of world trade rules.
"Using the renminbi exchange rate issue as an excuse to
engage in trade protectionism against China can only harm
China-U.S. trade and economic relations, and will have a
negative effect on both countries' economies and the world
economy," Jiang told a regular news briefing.
"We urge the members of the U.S. Congress to understand
clearly the importance of China-U.S. trade and economic
relations, and put a halt to protectionism so as to avoid
hurting the interests of the peoples of the two countries and
of the world."
PDF on the yuan r.reuters.com/haz94p
Graphic-Yuan revaluation link.reuters.com/cek24p
Factbox on the U.S. currency bill [ID:nN2850731]
Factbox on U.S.-China trade disputes [ID:nN28178891]
Q&A on U.S.-China tensions [ID:nN28104219]
Breakingviews-China could be left in cold [ID:nN29269305]
Insider-Green on yaun NDF link.reuters.com/tum26p
Whether China would take any U.S. law on the yuan to the
World Trade Organisation was "hypothetical", she said.
The bill would need to be passed by the Senate -- far from
certain and not likely until after congressional elections on
Nov. 2 when the U.S. political landscape could be greatly
changed -- and signed by President Barack Obama to become law.
China's tight leash on the yuan is under intense scrutiny
as countries around the world look to export their way back to
economic health, raising concerns they will intentionally
weaken their currencies to gain an edge.
The bill allows the U.S. Commerce Department to treat
"fundamentally undervalued currencies" as an illegal export
subsidy so that U.S. companies can request a countervailing
duty to offset China's price advantage.
Earlier in the day, the official Xinhua news agency quoted
China's Commerce Ministry spokesman, Yao Jian, as saying:
"Starting a countervailing investigation in the name of
exchange rates does not conform with relevant WTO rules."
That lawyer-like statement was relatively moderate compared
with China's reaction to other disputes this year, including
U.S. weapons sales to Taiwan, when Beijing froze military
contacts with the United States.
"I don't think China will have any dramatic reaction to
this bill's passing," said Jin Canrong, a professor of
international relations at Renmin University in Beijing, who
specialises in U.S.-China relations. "China wants to preserve
the stability of overall relations."
The American Chamber of Commerce in China voiced its
opposition to the Chinese currency legislation in an email,
saying: "If enacted into law, the chamber does not believe the
bill will be effective in achieving its objectives and would
fail to create significant U.S. job growth."
China's central bank fixed the yuan's daily mid-point
versus the dollar at a weaker level on Thursday.
Despite the weaker mid-point, the yuan has now gained
almost 2.2 percent against the dollar since Beijing scrapped a
23-month-old peg to the dollar on June 19 and said it would let
the currency resume a managed float. Nearly all of the increase
has occurred this month.
The bill could fan the flames of a long-running dispute
with China over trade and jobs.
It passed with solid bipartisan support just over a month
ahead of mid-term elections as voters focus on the
still-struggling U.S. economy and persistently high
QUICK YUAN MOVES UNLIKELY
Chinese analysts were sceptical that the legislation would
produce any quick movement on the yuan.
"If you are looking for another one-off revaluation of 3 to
5 percent, or are expecting a 20 percent rise in the yuan over
a year ... forget it," said Fu Bingtao, an economist with the
Agricultural Bank of China.
China, the largest foreign buyer of U.S. government debt
with holdings of nearly $847 billion as of July, says its big
trade surplus with the United States is due to Americans saving
too little and no longer making the goods that China sells.
While Obama has not taken a position on the legislation,
House Majority Leader Steny Hoyer said lawmakers worked with
the White House to ensure the bill did not violate WTO rules.
Treasury Secretary Timothy Geithner told Congress two weeks
ago that Washington would work with Group of 20 nations to push
China for faster appreciation, but several allies expressed
reluctance. G20 leaders are set to meet in Seoul on Nov.
(Additional reporting by Zhou Xin and Benjamin Kang Lim in
Beijing; Lu Jianxin and Karen Yeung in Shanghai; Matt
Spetalnick in Des Moines, Iowa; and Doug Palmer, Susan
Cornwell, Paul Eckert and Emily Kaiser in Washington; Writing
by Nick Macfie and Don Durfee; Editing by Ken Wills and Alex